Web Investment Researcher Weighs in on Private Prison Companies
PRINCETON, N.J. — Bullmarket.com, a company that provides daily newsletters that focus on long-term growth, value and income-generating investments, recently examined private correctional facility operators Geo Group and Corrections Corporation of America.
CCA and GEO, the top two providers of operational services at correctional facilities, have watched their profits jump following the federal government’s push to boost the number of beds available for illegal immigrant detention.
In August, industry-leader CCA posted a $26 million profit, an increase of 72 percent from last year, while second largest private prison operator GEO brought in $6.3 million, an increase of 60 percent over last year.
According to Bullmarket, CCA is the best option for investors in the current market.
“While GEO is also looking at exceptional profit growth in the year ahead, the larger Correction Corp. has a better record of generating returns from its investments in new business,” according to the company’s newsletter. “While it has a higher PS, across several other valuation metrics it is cheaper than GEO. Finally, the company also generates much more cash flow, including on a per share basis.”
However, because of the highly politicized nature of the corrections industry, Bullmarket is warning investors that the tide could turn at any time.
“Funding for current prison construction in Texas and other border states looks solid,” the newsletter states. “However, investors have to be mindful that the winds of this hot-button political issue could change direction quickly, which poses a risk to the company’s source of rapid growth.”